When A Famous Hospital Didn't Want An Expensive New Drug

Last year, a new drug called Zaltrap was approved as a kind of last-chance therapy for patients with colorectal cancer. Studies suggested Zaltrap worked almost exactly as well as an existing drug called Avastin. In fact, the main difference between the two drugs seemed to be the price.

Zaltrap costs about $11,000 per month — about twice as much as Avastin, Saltz said.

Saltz and his colleagues at Memorial Sloan-Kettering Cancer Center in New York made what seemed like a very reasonable decision: The hospital would not stock the more expensive drug. But taking cost into account for a new cancer drug was a very unusual decision for the hospital

"There was a lot of angst over it, simply because it had never been done before" at Sloan-Kettering, Saltz says.

It was such a big deal that he and a few of his colleagues decided to write an op-ed about their decision in the New York Times. The op-ed ran under the headline "In Cancer Care, Cost Matters." Peter Bach, one of the doctors who co-authored the op-ed, braced for the reaction.

"I admit to clutching my chair as it went up," he says. "But, you know, [the response] was really uniformly positive."

After the op-ed ran, Sanofi, the company that co-markets the drug, started offering hospitals a discount of 50 percent on Zaltrap. (The company wouldn't comment for this story. Bach has taken speaking fees from the company that makes Avastin. Saltz has been paid consulting fees from both drug companies.)

So why doesn't this sort of thing happen more often? Why is a high-profile hospital choosing not to buy an expensive new drug so rare that it merits an op-ed in the New York Times?

It's partly because we don't know how a lot of drugs compare to other drugs. The head-to-head studies just haven't been done. That is starting to change, though, as federal funding for comparative studies increases.

More head-to-head studies will raise a new question: What do you do with comparative information when you have it?

The Zaltrap case was a bit of a fluke. Two drugs seemed to worked equally well. Both extended life by 1.4 months. But what if Zaltrap had worked slightly better than Avastin? What if it had extended life by, say, an extra week? Would Sloan-Kettering have stocked the drug then, in spite of the price?

"Absolutely," Bach says. "We are a premier cancer center in the country — maybe the world — and drugs that provide additional benefit are ones we want to understand and want to be able to use."

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Transcript

DAVID GREENE, HOST:

Now, one of the many reasons medical care is expensive is that medicine itself can be expensive. David Kestenbaum, with our Planet Money Team, has this story about one hospital that tried to do something about a drug that seemed particularly over-priced; something that wouldn't seem controversial except in the world of healthcare.

DAVID KESTENBAUM, BYLINE: As a doctor, Leonard Saltz says he's always hopeful when a new drug comes out, because his patients are often very, very sick with colon cancer or rectal cancer. And last year, a drug called Zaltrap came on the market. It's meant to be used as a kind of last chance therapy. Sadly, Saltz says, it was not the breakthrough that had been hoped for. Studies indicated it was not better than an existing drug, called Avastin. In fact, the only difference, and it was a big one, seemed to be the price.

LEONARD SALTZ: I was rather stunned that it was more than double. The wholesale cost would be in the range of $11,000. That would be for a month of therapy.

KESTENBAUM: So here were two drugs, seemed to work about the same, but one was twice the price. What to do? Leonard Saltz and colleagues at Memorial Sloan Kettering Cancer Center in New York made what seemed like a very reasonable decision. The hospital would not stock the more expensive drug. But that simple act of taking cost into account for a new cancer drug, it was a very unusual thing for his hospital to do.

SALTZ: There was a lot of angst over it, simply because it had never been done before. We simply had no precedent as a leading cancer hospital for saying, there's a new anti-cancer drug that's been determined by the FDA to be safe and effective and we're not going to put it on our shelf and we're not going to use it.

PETER BACH: And that's when the idea came to write the op-ed.

KESTENBAUM: That's Peter Bach, another doctor at the hospital. He says this decision was so unprecedented, they decided it merited an op-ed in the New York Times. The New York Times agreed, Bach, Saltz and a colleague wrote up what they'd done, disclosed their conflicts of interest, which I'll mention here. Bach has taken speaking fees from the company that makes the cheaper drug, Avastin.

Saltz has been taking consulting fees from both drug companies. And the op-ed ran. Title, "In Cancer Care, Cost Matters." Bach braced for the reaction.

BACH: I mean, I admit to, sort of, clutching my chair as it went up, but, you know, it was really uniformly positive.

KESTENBAUM: At least, from his colleagues. A little while later, Leonard Saltz says, representatives from the company that makes the drug, they came by for a little talk.

SALTZ: They came here to this office and told us that they were offering a 50 percent discount.

KESTENBAUM: Across the board for all hospitals. The drug company, Sanofi, wouldn't comment for this story, but Saltz said what he thinks happened is that the company had initially set its price with the idea that it would be comparable to Avastin. But Saltz says its common to use half doses of Avastin and so, by that standard, Zaltrap was coming out twice as expensive.

In any case, just pointing out that the price seemed high prompted the drug company to cut the price in half. So why doesn't this happen more often? One reason is that we don't always know how a lot of drugs compare. The studies just have not been done. That is changing, though. The stimulus bill and the recently passed Affordable Care Act provided funding for comparative effectiveness studies to compare various treatments.

But even then, there's a bigger, tougher question here. What do you do with that information? This case was a bit of a fluke. Two drugs seemed to work equally well, exactly equally well. They extended life by 1.4 months. But what if the expensive drug had worked slightly better? Extended life by, say, six days more than the other drug or had slightly fewer side effects? What then?

Do you stop drugs like that when they're massively more expensive? Here's Peter Bach.

BACH: We will, sure. Absolutely. We are premier cancer center, in the country or maybe in the world, and drugs that provide additional benefit are ones that, you know, we want to understand and want to be able to use no matter what the cost. It's very unappealing when put that way.

KESTENBAUM: The alternatives are also unappealing. Do doctors not give someone the best treatment because they're trying to contain costs? That tension, in a nutshell, is one reason healthcare costs keep going up. David Kestenbaum, NPR News. Transcript provided by NPR, Copyright NPR.